Closure of council-owned company paused

Richard Evans – Local democracy reporter

The closure of a council-owned company employing people with disabilities has been paused following a backlash and a call-in from backbenchers.

The decision to close Cefndy Healthcare in Rhyl was made by Denbighshire County Council’s cabinet in October after more than four decades in business.

Based on Cefndy Road, the organisation is branded as creating “meaningful, well-paid employment” for disabled people “encouraging and training its staff to maximise their potential”.

Cefndy Healthcare started in 1976 as “Cefndy Enterprises” as part of the then Clwyd County Council.

The company employs around 30 staff, both able and disabled, producing healthcare and mobility equipment, but has seen its income fall from £3 million to £2.7 million.

A council report had warned that doing nothing was not an option, with rising costs and a forecasted need of £720,000 of council funding – “when the council is still facing increasing financial pressures”.

These costs were estimated to increase significantly in future years.

Cabinet members then unanimously voted to close the venture, blaming the competitive global market.

The closure, if it goes ahead, will cost £880k, including redundancy payments, but the council believed it could recover around £600k by selling the site – with interest from Grwp Llandrillo Menai, who want to expand their campus.

But councillors called the decision in, and following a debate by a scrutiny committee, the cabinet has agreed to pause the closure for six months.

Backed by several other non-cabinet members, Cllr Gareth Sandilands called the matter in due to the decision being possibly “made without consideration of reasonable alternatives”.

Land

The scrutiny committee said the cabinet’s decision may have been made “contrary to principles of good governance, transparency, and evidence-based decision making”.

In particular, the committee cited the “failure to fully assess the ‘social enterprise’ and ‘remodelled business’ proposals”.

Speaking at today’s (Tuesday’s) cabinet meeting, Cllr Terry Mendies claimed the council could be forced to pay back a recent £350,000 grant from the department of work and pensions if the business were closed and the land sold.

He also questioned “why the cabinet made so many bad decisions”.

He said there was nine cabinet members “overseeing a budget of about £280m and that “out of those nine people, there were five teachers and a head teacher”.

He added: “I’m sure they were very good teachers. We have one lawyer. We have one bus manager, and I’m sure he was a very good bus manager. We have a social worker, and again, I’m sure he was a very good social worker, but the lead member who is instrumental in making this decision has no business experience.”

Labour leader Cllr Jason McLellan then cut across the Tory councillor.

He said: “I really appreciate your very detailed report from cabinet. I thank you for it. But I don’t think it’s appropriate to make personal comments about the professional backgrounds of the cabinet members. I really don’t.”

Cllr Mendies said they weren’t personal comments and that he was “simply highlighting the lack of business experience when you are trying to keep a semi-commercial venture open”.

Review

Cllr McLellan responded: “I can tell you about my 30 years of experience in the private sector another time, Terry (Cllr Mendies). Now is not the occasion.”

Cllr Mendies said scrutiny now wanted to refer the matter back to cabinet to review the decision and conduct a “detailed, forensic feasibility study” of all options to secure Cefndy’s future.

He also added a wider membership of councillors should be involved going forward.

Cllr McLellan said: “This cabinet carefully considered all the detailed evidence provided earlier, and we looked at all reasonable alternatives.

“Cabinet is satisfied that Cefndy, in its current position, as it stands now, its current model, is not financially sustainable or viable particularly in the economic climate that we are in. So the decision was made in good faith; however, we have listened to the views of scrutiny, as outlined very well by Cllr Mendies. We have listened to the wider membership. We have listened to the staff. We have listened to UNISON, the unions, and other stakeholders, and of course, the strength of feeling on this matter.”

He added: “On balance we have concluded we will now pause the proposed closure of Cefndy so that interested parties might develop their own suggestions or alternative delivery models for the sustainable operation of Cefndy going forward in the future.”

The closure will now be paused for six months whilst other options are explored.

But council officers warned the company’s financial situation might have already been damaged further with the question marks over the business’ future.

The leader said a review would be inclusive as possible, involving the unions, with a six-month pause.
Funds of around £200,000 could be used from the council’s reserves to cover the costs of the pause while the review is conducted.